Nov. 5 (Bloomberg) -- India will be a net importer of sugar for a third year next crop season as the world’s biggest consumer seeks to build inventory, an industry executive said.

Sugar output may rise to 24 million metric tons in the year beginning Oct. 1, 2010, from 17 million tons this season, just enough to meet local demand, Nikhil Sawhney, executive director at Triveni Engineering & Industries Ltd., said in an interview yesterday. The company is the nation’s third-largest producer.

“It’s reasonable to expect that India will remain a net importer of sugar even next season,” Sawhney said in a phone interview from New Delhi yesterday. “How much India imports will depend on the global price scenario and what level of buffer it needs to build.”

Sugar has doubled this year, reaching a 28-year high in New York in September, as production lagged behind demand in India and excess rain hampered harvesting and yields in Brazil, the top producer. India will remain the largest buyer with a deficit of 8 million tons in 2009-10, according to Czarnikow Group Ltd.

The nation will need to buy at least 2 million tons more sugar this season, in addition to contracted supplies, to meet domestic demand forecast at 23 million tons, Triveni’s Sawhney said. The country has so far received about half the 5 million tons it contracted to buy last season. Output this crop season may be 2 million tons more than the 15 million tons last year because of improved yield and higher sucrose content in the cane, he said.

Crop Condition

“The crop is in excellent condition and we expect higher yield and recovery to compensate for lower cane output,” he said. Diversion of cane for production of jaggery, a traditional unrefined sugar consumed in Asia, was also expected to decline, he said.

Cane output may decline 9 percent to 249.5 million tons this year, the farm ministry said Nov. 3. Sugar production may total 16 million tons this year, Farm Minister Sharad Pawar said yesterday.

Raw sugar in New York fell 1.6 percent to 23.59 cents a pound yesterday, while white sugar rose 0.2 percent to $608.20 a ton. Prices at Vashi, India’s biggest wholesale market, reached a record 3,421.10 rupees for 100 kilograms on Nov. 3. Cane crushing is expected to begin in the next two weeks.

“There’s no crisis as far as sugar availability in India is concerned at the moment,” Triveni’s Sawhney said. “The increase in local prices is a function of global rates and India will import as long as there’s import parity.”

Sugar prices may stay at “current levels” in the 2009-10 season as nations such as Indonesia and Pakistan import sugar, widening a global deficit, Sawhney said.

Pakistan Imports

Pakistan plans to import 500,000 tons each of white and raw sugar to meet a 1.2 million ton of shortage, Information Minister Qamar Zaman Kaira told reporters yesterday. Indonesia, Southeast Asia’s top sugar buyer, awarded permits to eight refiners to import 445,000 tons of raw sweetener in the fourth quarter, Yamin Rachman, executive director at the Indonesian Refined Sugar Association, said on Oct. 12.

Bulk sugar users such as biscuit, confectionary and soft- drink companies may directly import white sugar after the government imposed limits on the quantity they can stockpile, Triveni’s Sawhney said. As big consumers account for more than 60 percent of India’s sugar consumption, the doubling of prices had not moderated demand, he said.

India’s government will extend the deadline for duty-free imports of raw sugar by nine months Dec. 31 2010 and the decision will soon be notified, said a government official on Oct. 27.

To contact the reporter on this story: Thomas Kutty Abraham at tabraham4@bloomberg.net

Last Updated: November 4, 2009 23:18 EST